In my opinion, December is the best time to visit Nicaragua: It's just after the rainy season, and the Pacific coast is lush, green, and not too hot. As the dry season progresses towards May, it can get uncomfortably hot in this part of the country, and the Pacific basin loses its bloom and becomes dry and leafless. This is the best time for bird-watching in the rainforests and snorkeling in the Caribbean, where the waters are calmer. The rainy season is not as uncomfortable as it sounds, with showers normally occurring in the afternoon and at night.
Christmas, New Year's, and Easter are the big holidays in Nicaragua, when the locals flock to the beaches and hotels are at capacity and charge premium rates. Unless you want to party and spend big, avoid these holiday periods.
Climate -- Like most of Central America, Nicaragua's climate is tropical, and the year is split between summer (Dec-Apr) and winter (May-Nov), though the temperature is consistent throughout the year, ranging from 54° to 82°F (12°-28°C). The main seasonal difference involves rainfall; the rainy season falls between May and October, with hurricanes buffeting the coast in September and October. Generally speaking, the Caribbean side of the country receives a lot more rainfall than the Pacific side. Altitude is also a factor with the weather -- the highlands have a more spring-like climate compared to the hotter and more humid lowlands and coastal areas.
Public Holidays -- Public holidays include New Year's Day (Jan 1); Easter Week (Thurs, Fri, and Sat before Easter Sunday), Labor Day (May 1), and Christmas Day (Dec 25). Liberation Day (July 19) celebrates victory over the Somoza regime, while the Battle of San Jacinto (Sept 14) rejoices the ending of William Walker's tyranny in 1856. Independence Day (Sept 15) is followed by Día de los Muertos (Nov 2), or the Day of the Dead, which is the Latin American version of All Souls' Day. Feast of the Immaculate Conception (Dec 8) is also known as La Purisma.
For an exhaustive list of events beyond those listed here, check http://events.frommers.com, where you'll find a searchable, up-to-the-minute roster of what's happening in cities all over the world.